Mr. SNYDER. I don't think anybody would want to condone an unsafe operation or an unsafe system, if that is the proper terminology. I think that the Norwegians concluded that they didn't experience any more overtime in their experiment nor have any particular problems; maybe the experiment was not comprehensive enough to reach other conclusions.

I don't pass judgment on that. But it does strike me that in our mutual concern and effort for increasing the viability and availability of our merchant marine that there ought to perhaps be some consideration given on the part of the unions representing the unlicensed personnel, in their negotiations down the road, to look hard at this Norwegian experience and, as a part of the negotiation, to agree to whatever reductions could reasonably and safely be made safe in consideration for a commitment on the part of management to agree to expand their fleet to the point of not reducing your membership at work and thereby help to get the operation on a profitable basis.

If the shareholders and the management are making some money they will expand and maybe help you. That is the thought I have in mind, it may be full of errors and loopholes, but I would think that in your negotiations that in consideration for more profitability, resulting from reducing the cost of labor by some 20 percent, you could get back a commitment in your contracts to increase the size of their fleets so as to compensate or more than compensate for the loss of personnel per vessel that it would be to your overall advantage in your union.

Mr. SPECTOR. Mr. Snyder, I have to agree with you 100 percent in theory. We have had actual experience where we have sat down with operators and said-one in particular I can think of in the lakes. He was operating five tankers in the lakes with a crew of 20, 100 jobs. He told us he was going to build three modern ships with a crew of 10, unlicensed, that is, so that we would go from 20 to 10, a 50-percent reduction.

But these would be additions. And we said, fine. And we cooperated, and those three ships were built and they are operating and the five ships that were operating before are all gone. And this has happened in the deep sea time and again. New technology comes in; new ships are developed; the old ships go. The new ships have smaller manning and they are replacing multiple numbers of the older ships.

The end result is today you have a fleet of roughly 550 vessels instead of 900 and some vessels a decade ago.

Mr. SNYDER. Maybe, as you say, what I say is fine in theory and not in practical application but I would like to see you consider those things in your negotiations with your employers. I know that it has got to be your purpose, and legitimately and rightfully so, and you wouldn't be doing your job if it wasn't, that is, to attempt to increase the number of personnel that you represent and the size of your union.

On the other hand, it strikes me in my limited knowledge of the matter, that preservation is almost a first priority above the increase and I am sure you are aware of that.

Mr. SPECTOR. That is why all of our manning scales, sir, have been reduced drastically particularly on existing tonnage in an attempt to make them last longer.

Mr. SNYDER. I would hope that you look hard at reducing manning scales on existing tonnage, getting for it as a quid pro quo in your agreements a commitment to put these men at work on additional vessels that may be more profitable.

Thank you, Mr. Chairman.

The CHAIRMAN. Counsel?

Mr. LOSCH. Thank you, Mr. Chairman.

Mr. Spector, just one quick question. You talk about the decline of the merchant fleet and some of the problems of the fleet and the inability to build new ships. Would you say that given the goals of the Merchant Marine Act to develop a fleet sufficient to carry all of our domestic commerce and a substantial portion of our foreign commerce, that perhaps the act has not done as well as was intended to do and should be classified as a failure?

Mr. SPECTOR. No, I believe the act is not a failure. I believe the act, as designed, was basically a liner act. Our foreign trade, when the 1936 act went into effect, had very little bulk in it. Today, I think, roughly 92 percent of our total foreign trade tonnage is bulk. It didn't exist back in the days of the 1936 act and what we did was build liner vessels. And it has worked reasonably well.

We are not at 50 percent. We would want to be at 50 percent, but we are at 30 percent at least in relation to about 3 percent or less in the bulk area. I would have to say, on balance, that the act has worked well.

Mr. Losch. It has worked well for liners.

Mr. SPECTOR. Yes.

At LosCH. But less than what we expected or hoped. Would you May 30 percent is a success?

Mr SPRCTOR. Yes, when I view it in terms of 3 percent. As long As this country allows the runaway vessel, foreign-flag vessel, flying a foreign flag, tax advantages, not the same safety standards, put any crew you want on, exploit labor, and on and on I can As we are not going to have a bulk fleet.

Mt Losen Then, with respect to liners you would say it is a qualified success. With respect to bulk is it not a failure?

Mr SPRCTOR It has never really applied to the bulk.

Me Loser What about the 1970 amendments? Weren't they designed specifically to deal with the bulk trade?

ME SPRCION It was, and until we have some way or vehicle of providing bulk cargo I don't think we will build very many bulkers. ME Loser So then, the 1970 amendments with respect to bulk were a Gulure" We didn't produce. We built two Os.

A Seacros In the general cargo area we had a different situation in terms of obtainability of cargo. But, as I said, as long as the gut compsamese can fly the Liberian flag or other flag they are not ng to bring their ships under the American flag, and the availBality of cargo is not there.

Unless you have a policy which brings you cargo you are not going to build bulk ships, whether it is iron ore, whether it is bauxites whether it is oil

Mr. LOSCH. But, as Mr. Snyder pointed out, in the Russian grain trade it is not cargo because we have cargo available reserved for U.S.-flag ships.

Mr. SPECTOR. Fine, and this is one illustration. If we could get a 50-50 bilateral with all of our trading countries, or 40-40-20 as UNCTAD calls for perhaps we could start building in the bulk area. But we don't have these policies. It is an isolated instance where we have a bilateral agreement with the Russians.

Mr. Losch. But that in itself has not

Mr. SPECTOR. That in itself will not build ships. Only cargo will build ships.

Mr. LOSCH. Thank you, Mr. Chairman.

The CHAIRMAN. Thank you, Mr. Spector and Mr. Simpkins.

We will adjourn now and next Thursday at 10 o'clock in this room testimony will be received from the DOT, Transportation Institute, American Maritime Association, Farrel Lines, Moore-McCormack, Delta, American President Prudential, Council of American-Flag Ship Operators, Joint Maritime Congress, National Maritime Council, Labor-Management Maritime Committee, and the American Institute of Merchant Shipping.

That is Thursday, March 15, at 10 o'clock.
The subcommittee is adjourned.

[The following was submitted:]

NATIONAL MARITIME UNION OF AMERICA,
New York, N. Y., April 4, 1979.

Hon. M. GENE SNYDER,
House of Representatives,
Washington, D.C.

DEAR CONGRESSMAN SNYDER: This letter is in response to the issues raised in your March 19th letter following our appearance in support of the Maritime Authorization Request.

1. "The total number of NMU members who work on U.S. flag oceangoing vessels (vessels greater than 1,000 GRT)."

As of March, 1979 approximately 18,000 members.

2. "The total number of U.S. flag oceangoing vessels (vessels greater than 1,000 GRT) under NMU contract."

As of March, 1979, 235 oceangoing vessels of which 137 are dry cargo and 98 are tankers.

3. "The total number of NMU retired or inactive member who would be recallable in times of national emergency.'

A number of assumptions were made prior to answering this question. First, it was assumed that NMU retirees under the age of 55 have continued their employment in the maritime industry or some collateral branch thereof, and thus would not be recallable. Second, it was assumed that all retirees beyond the age of 64 would not be recallable. Third, disability pensioners were excluded from these calculations. It must also be realized that the NMU does not maintain an “inactive member" status. Out of the remaining pool of retirees (age 55-64 inclusive), on the basis of past experience it was assumed that 75 percent thereof, or 2,936 (1977 data) pensioners, would be recallable.

4. "The NMU's position on the concept of expanding the U.S fleet by allowing U.S. operators to foreign build vessels, reflag them in the U.S. and operate them with operating subsidy and preference cargo.'

With reference to this issue, I bring to your attention the following:

(1) The AFL-CIO strongly opposes the export of U.S. jobs-either direct or collateral.

(2) There is a definite need, from a defense perspective, for a viable domestic shipbuilding base.

(3) The instant concept could result in unfair competition that would be engendered for those required to build or who have built in the U.S. The NMU is convinced that construction subsidies currently fail to provide for parity with for

eign shipbuilding. Given these three points, the NMU would consider this proposal, if conditioned upon proper safeguards.

5. "Your comments on the "TAGUS' reduced manning experiment."

The TAGUS experiment is difficult to evaluate without the particulars noted in 2.1 of the report pertaining to this ship. We note that the proposed manning involves no reduction in the licensed deck complement but would reduce the unlicensed deck complement by four. A manning scale of 2 A.B.s and 1 O.S. would be inadequate to tie-up and let go, launch lifeboats, assist other ships in an emergency, fight fires, etc. Further, the proposed manning would not provide enough manpower to keep a proper lookout and wheel watch in accordance with IMCO requirements. Normally a Norwegian ship carries 6 to 8 in the catering department. A reduction to two would have to result in a sharp drop in catering services which could adversely affect the health of the crew and create serious social problems in everyday living and care. The proposed reductions in the deck and engine departments would require licensed personnel to perform unlicensed work thereby reducing the effectiveness of the navigational watch. The use of shore-based personnel to carry out ongoing maintenance functions creates potential hazards without a proper discussion of the net savings, if any.

The cost analysis contained in pages 2 and 3 of the report on the TAGUS experiment is fragmentary and misleading inasmuch as they deal only with certain operational costs. Excluded are major cost items such as fuel, capital cost, debt service, overhead, port costs to include loading and discharging, etc. We have no doubt that substantial cost savings can always be made by destroying union standards as to working conditions and wages. Flags of Convenience ships rarely concern themselves with bona fide labor agreements and with respect to U.S. owned flag of convenience ships avoid substantial tax liabilities.

Enclosed are tables showing existing Norwegian manning scales for various ship types as of 1976 for comparison with the TAGUS proposal. These manning scales entail overtime payments of from 40 percent to 60 percent of base wage. Any conclusive analysis of the proposal would have to take into consideration the increase in overtime hours and cost, as well as the cost of performing numerous traditional shipboard functions by personnel other than the crew.

6. "The total number of NMU members who are enrolled in your Welfare/ Medical Plan."

In 1977 there were 9,905 seamen eligible for the full benefit program and 280 seamen eligible for the partial benefits.

7. "Copies of the two most recent audits of your Welfare/Medical Plan." See enclosed.

8. "The NMU's position on the rationale for subsidies for union maintained private health care plans in light of the government's support for the U.S. Public Health Service System."

The NMU welfare plan was conceived as an employee benefit for dependent coverage. Its recent amendment to include seamen was the direct result of the closing down of U.S. Public Health Service facilities. Frequently, the use of such facilities in a nonemergency basis imposed a severe hardship on NMU members by reason of the distances involved. Even though seamen prefer the government facilities they are confronted with the decision of using a private hospital close to home as compared to the government hospital which could be 1,000 miles away from home.

You will note from Table 4 of the 1977 NMU Welfare Plan Report that our members make limited use of private facilities for hospitalization as compared with dependent's benefits. In 1977 the total cost of seamen's benefits for hospitalization, surgical, doctors' hospital visits and major medical totaled $827,000 as compared with $2,316,102 for dependent's. Our program merely supplements the U.S. Public Health Service program benefits when it is clearly more advantageous for the seaman to use private facilities at a substantial cost to the user rather than public facilities which are free but not convenient.

You will also note that the medical department provides preemployment physicals and periodic diagnostic examinations to seamen through its medical department. 9. "Copies of the two most recent audits of your Joint Employment Committee trust fund account."

See enclosed.

Please do not hesitate to contact me if I could be of further assistance.

Respectfully,

Enclosures.

EUGENE P. SPECTOR,

Research Director.